Obradovich: Money shuffle doesn't solve problem

Jun. 17, 2013

Here’s a question for all the homeowners out there: If you use the money you set aside for roof repairs to fix a buckled sidewalk, have you saved any money?

That’s one way to look at the choice state legislators may face next year. Gov. Terry Branstad, noting political opposition to raising the gas tax for road and bridge repairs, has started suggesting other sources of money.

One of the alternatives he raised recently was taking part of the state’s Rebuild Iowa Infrastructure Fund, or RIIF. The fund has over $210 million next year, mostly from gambling taxes. The fund was created in the mid-1990s to help pay for what is known as “vertical infrastructure,” or repairs, updating and maintenance of state buildings.

I’ve mentioned that Branstad is likely to face political opposition from interest groups that rely on this fund. Over the years, that list has grown, as lawmakers have expanded the fund to cover environmental projects and just about anything else that they deemed appropriate for “one-time” money.

“It’s a great place for both parties to balance the budget without raising taxes,” said Scott Norvell, president of Master Builders of Iowa, a statewide contractors’ association.

Political pressures aside,however, there is an issue for taxpayers to consider.

The longer the state delays major maintenance for public buildings, the more expensive it becomes. A study done about 10 years ago found an alarming, $750 million deficit in the need to renovate and replace state buildings. Today, some estimate the backlog is over $1 billion.

The major maintenance needs identified by the Iowa Department of Administrative Services for the current fiscal year, which ends June 30, totaled about $100 million. The amount appropriated was $10.25 million. That amount was a “significant increase from the funding in the previous three fiscal years, but less than the department’s request of $15 million and far short of the identified need,” the report stated.

The department’s request to the Legislature this year said $31 million would cover all existing projects that pose a threat to life and safety. Lawmakers approved about $18 million, but they set some of that aside for relocation of employees in the chronically dumpy Wallace State Office Building and dealing with buildings at the end of the West Capitol Terrace.

That leaves about $16 million unfunded for fiscal year 2014. So it appears the state is not even covering repairs that pose a threat to life or safety.

I’m not pushing for a gas tax increase, although it may seem that way. In my car, adding a dime a gallon means an extra $1.70 per tank. If I fill up every two weeks, which is about average, it would cost about $44 extra a year. Assuming my husband does the same, that’s nearly $90 for our household next year. Some Iowans just can’t afford that, and this sort of tax increase hits low-income people the hardest.

But failing to repair roads and bridges can cost even more, and fuel tax revenues are no longer adequate for the task. Lawmakers over the years have created a variety of different funds to make use of different streams of revenue or to earmark certain money for specific needs. The Road Use Tax Fund is one of the few that is constitutionally protected.

Building fences around pots of money may keep some greedy fingers out, but it is also a trap if the revenue dries up. Siphoning money from under crumbling buildings to pay for crumbling roads makes little sense.

Ultimately, lawmakers are going to have to take down some of the fences and start doing their job: dividing up available money among the most important priorities. Right now, Iowa has a budget surplus that it could be using.

This year, legislators dedicated about $114 million from the state budget surplus to pay off bonds from previous infrastructure programs. That will save taxpayers money on interest.

But what good is it to pay off the mortgage early if the house is falling down?